EIG buys $1 billion in notes from Breitburn Energy Partners

Breitburn will sell US$350 million of perpetual convertible preferred units and US$650 million of senior secured notes to investment funds managed by EIG.

Breitburn Energy Partners LP is a publicly traded independent oil and gas master limited partnership focused on the acquisition, development, and production of oil and gas properties throughout the United States.

These offerings are expected to close on April 8, 2015, subject to the approval of an amendment to Breitburn’s senior credit facility and satisfaction of other customary closing conditions.

Hal Washburn, Chief Executive Officer of Breitburn, stated:

“We are pleased that EIG, a preeminent, global, energy-focused investment firm, has decided to make a sizable strategic investment in Breitburn. This transaction provides valuable pro forma excess liquidity for Breitburn and gives us the ability to opportunistically pursue strategic acquisitions in the current depressed commodity price environment.”

R. Blair Thomas, Chief Executive Officer of EIG, commented:

“We are excited to partner with a management team for whom we have great respect. We will work with Breitburn with the goal of creating significant value and distribution growth for unitholders given the substantial liquidity our investment will provide and the growth opportunities available in the current market environment.”

Breitburn expects to use the net proceeds from the private offerings of approximately US$938 million to repay borrowings under its credit facility, resulting in net borrowings, at closing, of approximately $1.24 billion.

In conjunction with the private offerings, Breitburn is amending its credit facility to allow for the issuance of the Senior Notes and to establish a revised borrowing base of $1.8 billion through April 2016, subject to limited exceptions.

Simultaneously, Breitburn has announced that it intends to reduce its common distribution to $0.50 per unit on an annualized basis in conjunction with these private offerings. This lower distribution rate is part of an overall plan to increase Breitburn’s liquidity and strategic flexibility for a potentially prolonged market downturn.

Breitburn has agreed to appoint Kurt Talbot, the Vice Chairman and Co-Head of the Investment Committee of EIG, to its Board of Directors upon completion of the financing transactions with EIG.

Jefferies LLC is serving as lead placement agent and sole financial advisor to Breitburn and Credit Suisse is serving as financial advisor to EIG.